4 ms·

Many corporations work like this also. First time I experienced this was some 15 years ago or so when a client (a brand owned by Kraft Foods) reached out and sa

by mstade 3y ago

Many corporations work like this also. First time I experienced this was some 15 years ago or so when a client (a brand owned by Kraft Foods) reached out and said they had x amount of money and needed a project to spend it on, lest they'd lose that money in next year's budget. So we got to work for 2-3 months on a project that was never planned. Can't recall what happened to it, but it was rather fun. I've only experienced it once or twice since, but hear about it happening all the time right around this time of year.

jsmith99 3y ago
Fortunately Kraft were later bought by 3G, a fund notorious for zero based budgeting, meaning instead of rolling forward budgets you start from zero every year and have to defend every item.
- stavros 3y ago
  That kind of sounds bad as well.
julian_t 3y ago
When I was doing freelance training a company asked me how much it would be for a week's C++ course for X people, and when I told them they said that wasn't high enough. Yep, budget spend time. So I asked them, theoretically of course, how much they were expecting to pay (and then said that I was prepared to accept that figure, but only this once ;-)
blowski 3y ago
My first computer was in the 1980s, bought for my Dad by Shell so he could work from home, despite not having any work that could be done remotely. His manager had a huge stationery budget.
croisillon 3y ago
having worked in various coporations i have seen these requests indeed: "where can we burn budget otherwise we get less next year" but i have never seen budget cuts on this basis actually happening and i wonder how much of it is an urban legend that gets passed and ends up fueling inflation
- dmd 3y ago
  Oh, it definitely is real. The first year I was at my current job I didn't use my entire budget. I won't make that mistake again.
  - jamiek88 3y ago
    Yes I did the same and also will never do that again. ‘Look boss I saved x from budget z but we achieved target y anyway! ‘Yeah but I gave you Z for a reason, if you’d have added extra resource you may have achieved y+1’ Only empire building is rewarded. Growth is everything. Savings are overrated and for household budgets not corps or governments.
- lukas099 3y ago
  I guess it never happens because the incentives are so strong not to let it happen. I had a boss who told me he would be in humongous trouble with his boards if he didn’t spend it all.
anonymous_sorry 3y ago
I have heard this many times about many places. It seems so perverse to a layman, so why is it apparently so widespread? Are there contexts in which it's the best system (ie. better than any reasonable alternative)?
- Jensson 3y ago
  You are a manager over two departments. A has 1 million left, B has 1 million deficit. What do you do? Easy answer: Move 1 million of A's budget to B! It isn't more complicated than that, it is very hard to motivate not reducing A's budget in that case. It does create perverse incentives, but at the same time what are you supposed to do as a manager in that situation?
  - anonymous_sorry 3y ago
    Well, to meet an in-year shortfall it makes sense to move the money around. But the implication seems to be that underspending departments are "punished" with a smaller budget in subsequent years. I would naively hope a good manager would ask for a justification of the spending of both departments, and allocate the forward budget according to reasonably-evidenced projections of value for money based on the organisation's priorities or goals. Perhaps the answer is that that is just too hard, or even more prone to being gamed.
dalbasal 3y ago
>>Many corporations work like this also. One of those things that are widely true, but rarely admitted to. It seems to be very much a maturity thing. The older,larger and more governed an org is, the more likely such a pattern is. Habits become precedents. Precedents become rules. A pattern emerges is everyone operates within rules. Staying within the ruleset, represents known safety. Even if something is dubious.. as long as it's within the rule set you are safe. Is shaky principle tentatively applied once.. it doesn't have that kind of safety. That means it's less likely to be stretched and made absurd. There is a logic to trimming unused budgets. not perfect, but it wouldn't surprise me if it worked well enough, often enough. If a department keeps going over budget, well.. they need more budget.. or maybe less work. Where is that budget going to come from? Departments without enough budget. It's hard to get more legible, than last year's expenditure as the starting point for the next years budget. Nothing very notable about birthing this "principle." I'm sure it makes sense, often. At least in the sense that it's the easiest, good enough method. If there's a new management, using old methods is helpful. They don't know enough.. and this just gets the job done. If budgets become contentious, sticking to "principles" helps smooth things. That is the point though.. whether it's a big-hype management method like agile.. or some unofficial budgetary principle that happened to work before these are principles. We like to be principled, especially when we don't really know what to do. There's a literary trope of a bone casting seer. It takes a wise person to cast bones. It's an art and science. Sure, you have to know what all the bones mean. But, you also have to figure out it's a good idea to fight to fight this particular battle, build a town in that particular place... And also to understand the role bone casting plays in this particular case. Bones must be cast, because we like external validation. It helps to bring everyone together, and calms underconfident, overwhelmed, or underunited leadership. Knowing when to cast them, why, all the different implications.. how to define the question, how to approach the answer.. those are jobs for the seer, not the bones themselves. Things are better when soldiers watch the stones, and chieftains watch the seer. If and when that flips, the paradigm is not at its best.

by mstade 3y ago

jsmith99 3y ago

Fortunately Kraft were later bought by 3G, a fund notorious for zero based budgeting, meaning instead of rolling forward budgets you start from zero every year and have to defend every item.

stavros 3y ago
That kind of sounds bad as well.

julian_t 3y ago

When I was doing freelance training a company asked me how much it would be for a week's C++ course for X people, and when I told them they said that wasn't high enough. Yep, budget spend time. So I asked them, theoretically of course, how much they were expecting to pay (and then said that I was prepared to accept that figure, but only this once ;-)

blowski 3y ago

My first computer was in the 1980s, bought for my Dad by Shell so he could work from home, despite not having any work that could be done remotely. His manager had a huge stationery budget.

croisillon 3y ago

having worked in various coporations i have seen these requests indeed: "where can we burn budget otherwise we get less next year" but i have never seen budget cuts on this basis actually happening and i wonder how much of it is an urban legend that gets passed and ends up fueling inflation

dmd 3y ago
Oh, it definitely is real. The first year I was at my current job I didn't use my entire budget. I won't make that mistake again.
- jamiek88 3y ago
  Yes I did the same and also will never do that again. ‘Look boss I saved x from budget z but we achieved target y anyway! ‘Yeah but I gave you Z for a reason, if you’d have added extra resource you may have achieved y+1’ Only empire building is rewarded. Growth is everything. Savings are overrated and for household budgets not corps or governments.
lukas099 3y ago
I guess it never happens because the incentives are so strong not to let it happen. I had a boss who told me he would be in humongous trouble with his boards if he didn’t spend it all.

anonymous_sorry 3y ago

I have heard this many times about many places. It seems so perverse to a layman, so why is it apparently so widespread? Are there contexts in which it's the best system (ie. better than any reasonable alternative)?

Jensson 3y ago
You are a manager over two departments. A has 1 million left, B has 1 million deficit. What do you do? Easy answer: Move 1 million of A's budget to B! It isn't more complicated than that, it is very hard to motivate not reducing A's budget in that case. It does create perverse incentives, but at the same time what are you supposed to do as a manager in that situation?
- anonymous_sorry 3y ago
  Well, to meet an in-year shortfall it makes sense to move the money around. But the implication seems to be that underspending departments are "punished" with a smaller budget in subsequent years. I would naively hope a good manager would ask for a justification of the spending of both departments, and allocate the forward budget according to reasonably-evidenced projections of value for money based on the organisation's priorities or goals. Perhaps the answer is that that is just too hard, or even more prone to being gamed.

dalbasal 3y ago

>>Many corporations work like this also. One of those things that are widely true, but rarely admitted to. It seems to be very much a maturity thing. The older,larger and more governed an org is, the more likely such a pattern is. Habits become precedents. Precedents become rules. A pattern emerges is everyone operates within rules. Staying within the ruleset, represents known safety. Even if something is dubious.. as long as it's within the rule set you are safe. Is shaky principle tentatively applied once.. it doesn't have that kind of safety. That means it's less likely to be stretched and made absurd. There is a logic to trimming unused budgets. not perfect, but it wouldn't surprise me if it worked well enough, often enough. If a department keeps going over budget, well.. they need more budget.. or maybe less work. Where is that budget going to come from? Departments without enough budget. It's hard to get more legible, than last year's expenditure as the starting point for the next years budget. Nothing very notable about birthing this "principle." I'm sure it makes sense, often. At least in the sense that it's the easiest, good enough method. If there's a new management, using old methods is helpful. They don't know enough.. and this just gets the job done. If budgets become contentious, sticking to "principles" helps smooth things. That is the point though.. whether it's a big-hype management method like agile.. or some unofficial budgetary principle that happened to work before these are principles. We like to be principled, especially when we don't really know what to do. There's a literary trope of a bone casting seer. It takes a wise person to cast bones. It's an art and science. Sure, you have to know what all the bones mean. But, you also have to figure out it's a good idea to fight to fight this particular battle, build a town in that particular place... And also to understand the role bone casting plays in this particular case. Bones must be cast, because we like external validation. It helps to bring everyone together, and calms underconfident, overwhelmed, or underunited leadership. Knowing when to cast them, why, all the different implications.. how to define the question, how to approach the answer.. those are jobs for the seer, not the bones themselves. Things are better when soldiers watch the stones, and chieftains watch the seer. If and when that flips, the paradigm is not at its best.